diff --git a/packages/shared-splitscreen/src/components/PanelControls.svelte b/packages/shared-splitscreen/src/components/PanelControls.svelte
index 0dfd2c012..925b4c237 100644
--- a/packages/shared-splitscreen/src/components/PanelControls.svelte
+++ b/packages/shared-splitscreen/src/components/PanelControls.svelte
@@ -69,12 +69,7 @@
 		border-radius: 8px;
 		border: 1px solid rgba(255, 255, 255, 0.1);
 		z-index: 20;
-		opacity: 0;
-		transition: opacity 0.2s ease;
-	}
-
-	.app-panel:hover .panel-controls,
-	.panel-controls:focus-within {
+		/* Always visible - important for closing the panel */
 		opacity: 1;
 	}
 
diff --git a/packages/shared-splitscreen/src/components/ResizeHandle.svelte b/packages/shared-splitscreen/src/components/ResizeHandle.svelte
index bfec10b6f..843573e7b 100644
--- a/packages/shared-splitscreen/src/components/ResizeHandle.svelte
+++ b/packages/shared-splitscreen/src/components/ResizeHandle.svelte
@@ -10,16 +10,22 @@
 		position: number;
 		onResize: (position: number) => void;
 		onReset: () => void;
+		onDragStateChange?: (isDragging: boolean) => void;
 	}
 
-	let { position, onResize, onReset }: Props = $props();
+	let { position, onResize, onReset, onDragStateChange }: Props = $props();
 
 	let isDragging = $state(false);
+
+	function setDragging(value: boolean) {
+		isDragging = value;
+		onDragStateChange?.(value);
+	}
 	let containerRef: HTMLElement | null = null;
 
 	function handleMouseDown(event: MouseEvent) {
 		event.preventDefault();
-		isDragging = true;
+		setDragging(true);
 
 		const handleMouseMove = (e: MouseEvent) => {
 			if (!containerRef) return;
@@ -39,7 +45,7 @@
 		};
 
 		const handleMouseUp = () => {
-			isDragging = false;
+			setDragging(false);
 			document.removeEventListener('mousemove', handleMouseMove);
 			document.removeEventListener('mouseup', handleMouseUp);
 		};
@@ -50,7 +56,7 @@
 
 	function handleTouchStart(event: TouchEvent) {
 		event.preventDefault();
-		isDragging = true;
+		setDragging(true);
 
 		const handleTouchMove = (e: TouchEvent) => {
 			if (!containerRef || !e.touches[0]) return;
@@ -70,7 +76,7 @@
 		};
 
 		const handleTouchEnd = () => {
-			isDragging = false;
+			setDragging(false);
 			document.removeEventListener('touchmove', handleTouchMove);
 			document.removeEventListener('touchend', handleTouchEnd);
 		};
diff --git a/packages/shared-splitscreen/src/components/SplitPaneContainer.svelte b/packages/shared-splitscreen/src/components/SplitPaneContainer.svelte
index ebb34febf..f0ddaf89d 100644
--- a/packages/shared-splitscreen/src/components/SplitPaneContainer.svelte
+++ b/packages/shared-splitscreen/src/components/SplitPaneContainer.svelte
@@ -5,7 +5,6 @@
 	 */
 
 	import type { Snippet } from 'svelte';
-	import { onMount } from 'svelte';
 	import { getSplitPanelContext } from '../stores/split-panel.svelte.js';
 	import AppPanel from './AppPanel.svelte';
 	import PanelControls from './PanelControls.svelte';
@@ -20,6 +19,9 @@
 
 	const splitPanel = getSplitPanelContext();
 
+	// Track if resize handle is being dragged - used to disable iframe pointer events
+	let isResizing = $state(false);
+
 	// Grid template based on divider position
 	let gridTemplate = $derived(
 		splitPanel.isActive && splitPanel.rightPanel ? `${splitPanel.dividerPosition}% 6px 1fr` : '1fr'
@@ -32,13 +34,23 @@
 	function handleReset() {
 		splitPanel.resetDividerPosition();
 	}
+
+	function handleDragStateChange(isDragging: boolean) {
+		isResizing = isDragging;
+	}
 </script>
 
 <div
 	class="split-pane-container {className}"
 	class:split-active={splitPanel.isActive && splitPanel.rightPanel}
+	class:resizing={isResizing}
 	style:--grid-template={gridTemplate}
 >
+	<!-- Overlay during resize to capture all mouse events -->
+	{#if isResizing}
+		<div class="resize-overlay"></div>
+	{/if}
+
 	<div class="main-panel">
 		{@render children()}
 	</div>
@@ -48,9 +60,10 @@
 			position={splitPanel.dividerPosition}
 			onResize={handleResize}
 			onReset={handleReset}
+			onDragStateChange={handleDragStateChange}
 		/>
 
-		<div class="side-panel">
+		<div class="side-panel" class:resizing={isResizing}>
 			<AppPanel panel={splitPanel.rightPanel} />
 			<PanelControls
 				panelName={splitPanel.rightPanel.name || splitPanel.rightPanel.appId}
@@ -69,6 +82,15 @@
 		height: 100%;
 		min-height: 0;
 		overflow: hidden;
+		position: relative;
+	}
+
+	/* Transparent overlay during resize - captures all mouse events */
+	.resize-overlay {
+		position: absolute;
+		inset: 0;
+		z-index: 100;
+		cursor: col-resize;
 	}
 
 	.main-panel {
@@ -89,6 +111,11 @@
 		overflow: hidden;
 	}
 
+	/* Disable iframe pointer events during resize to prevent event stealing */
+	.side-panel.resizing :global(iframe) {
+		pointer-events: none;
+	}
+
 	/* Ensure proper stacking */
 	.split-active .main-panel {
 		z-index: 1;
diff --git a/packages/shared-splitscreen/src/stores/split-panel.svelte.ts b/packages/shared-splitscreen/src/stores/split-panel.svelte.ts
index 9559f6a6e..9bfd13e6f 100644
--- a/packages/shared-splitscreen/src/stores/split-panel.svelte.ts
+++ b/packages/shared-splitscreen/src/stores/split-panel.svelte.ts
@@ -74,7 +74,7 @@ export function createSplitPanelStore(
 	// Reactive state using Svelte 5 runes
 	let isActive = $state(false);
 	let rightPanel = $state<PanelConfig | null>(null);
-	let dividerPosition = $state(DIVIDER_CONSTRAINTS.DEFAULT);
+	let dividerPosition = $state<number>(DIVIDER_CONSTRAINTS.DEFAULT);
 	let isMobile = $state(false);
 
 	// Storage config for persistence